How whole life insurance works
Whole life insurance is designed to stay with you for your whole life. As long as you pay the premiums, the policy pays a death benefit to your beneficiaries whenever you die, whether that’s next year or at 95. Your premium is set when the policy is issued and stays level, so it won’t rise as you age.
Part of each premium builds cash value, a living benefit inside the policy. Whole life cash value grows at a guaranteed rate, and that growth is tax-deferred. Over time, you may be able to borrow against it or surrender the policy for its cash value. Loans and withdrawals reduce the death benefit if they aren’t repaid.
Some whole life policies from mutual insurers may also pay dividends. Dividends are never guaranteed, but when they’re paid they can be taken as cash, used to lower premiums, or used to buy additional coverage. Kris will explain which parts of a policy are guaranteed and which aren’t.
- Guaranteed death benefit for life, as long as premiums are paid
- Level premiums that never increase
- Guaranteed cash value with tax-deferred growth
- Policy loans available against the cash value, which reduce the death benefit if unpaid
Universal life: flexibility in exchange for some guarantees
Universal life is a type of permanent life insurance built for people who want more control. Instead of a fixed premium, you can pay more or less within limits set by the policy. You can often raise or lower the death benefit as your needs change, subject to the carrier’s rules and, for increases, new underwriting.
Universal life also builds cash value, but it works differently from whole life. The cash value is adjusted monthly. It’s credited with interest based on the policy’s rate and reduced by the cost of insurance and policy charges. If the cash value runs too low, you may need to pay more to keep the policy in force.
Some universal life policies include a no-lapse or secondary guarantee that keeps the death benefit in force as long as you pay a required premium. These are often used when someone wants lifelong coverage at a lower cost than whole life and isn’t focused on building cash value.
| Feature | Whole life | Universal life |
|---|---|---|
| Premiums | Level and fixed | Flexible within policy limits |
| Death benefit | Fixed and guaranteed | Can often be adjusted |
| Cash value | Guaranteed growth, tax-deferred | Adjusted monthly based on credited interest and charges |
| Main strength | Predictability and guarantees | Flexibility and often a lower premium |
| Main trade-off | Higher premium | Needs monitoring so it stays funded |
Because universal life cash value depends on credited interest and policy charges, it’s wise to review your annual statement and an in-force illustration from time to time. Kris can help you read these and spot if a policy needs more funding.
When permanent life insurance makes sense
Permanent coverage costs more than term life insurance for the same death benefit, so it’s worth asking what you need it to do. It tends to fit needs that last your whole life rather than a set number of years. For many people in their 50s and 60s, those lifelong needs become clearer as kids grow up and retirement gets closer.
Common reasons include leaving money to children or grandchildren, protecting a spouse who would lose part of a pension or Social Security income, providing for a family member with special needs, or keeping a family business running. Some people also value the steady, guaranteed cash value as part of their overall planning.
If your main goal is covering funeral costs and a few final bills, a smaller final expense policy may be the simpler fit. Final expense is actually a type of whole life, just with a smaller face amount and easier underwriting. It’s often a good match for people who want lifelong coverage without a medical exam or a large premium commitment.
Another common approach is to layer coverage. A family might keep a term policy for the mortgage years and add a modest whole life policy for lifelong needs. When the term ends, the permanent coverage is still there. This can cost less than buying all permanent coverage up front, while still making sure something is in place no matter how long you live.
- Leaving a legacy to children, grandchildren or a charity
- Protecting a surviving spouse’s retirement income
- Lifelong support for a dependent with special needs
- Helping a family business continue or pass to the next generation
- Covering final costs so loved ones aren’t burdened
Questions to ask before you buy
Permanent life insurance is a long-term commitment, so take your time. Start with the premium. Make sure it fits comfortably in your budget, not just today but in retirement. A policy that lapses after several years because premiums became a strain may not deliver the value you expected.
Next, ask how the cash value works. With whole life, look at the guaranteed values in the illustration, not just the projected ones. With universal life, ask what happens if credited rates are lower than shown, and how much premium it would take to keep the policy in force to an advanced age.
Finally, ask about surrender charges, loan interest and any riders, such as accelerated death benefits for chronic or terminal illness. Kris is a licensed agent, not a tax or legal adviser, so for questions about estate taxes or trusts she’ll encourage you to involve your tax professional or attorney.
How Kris helps
Kris starts by understanding what you want the policy to accomplish. She’ll ask about your family, your retirement income, any debts, and what you hope to leave behind. That conversation tells her whether whole life, universal life, term, or a combination makes the most sense for you.
From there, she compares permanent policies from the carriers she represents, walks you through the illustrations line by line, and points out what’s guaranteed and what’s only projected. She helps you complete the application, coordinates any exam or records requests, and stays with you through underwriting until the policy is delivered and you understand it.
After that, Kris remains your point of contact for beneficiary changes, policy reviews and claims questions. Life changes, such as a marriage, a new grandchild or the loss of a spouse, are good times to check that your beneficiaries and coverage amounts still reflect your wishes. To see the full range of coverage she offers, visit our life insurance page, or request a quote and she’ll reach out.
Permanent coverage for families across northwest Ohio
Kris has been helping families in Perrysburg, Toledo and throughout northwest Ohio since 2017. Because she also helps with Medicare and retirement coverage, she can talk about life insurance as part of your whole picture. Having one local agent who knows your situation makes those conversations easier.
You’re welcome to sit down with Kris at her Perrysburg office, or meet by phone or video. Consultations are no-cost and no-pressure. If you already own a whole life or universal life policy and aren’t sure how it’s performing, bring your latest statement and she’ll help you understand it.
Kris is licensed in Ohio, Michigan, Indiana and Florida, so your coverage questions can follow you if you split time between northwest Ohio and a winter home, or if children you want to name as beneficiaries live out of state. Office hours are Monday through Friday, 9 AM to 5 PM, and you’re welcome to bring a spouse or adult child along to the conversation.
Who whole & universal life insurance may be right for
- People who want life insurance that won’t expire
- Couples protecting a spouse’s retirement income
- Parents and grandparents who want to leave a legacy
- Business owners planning for succession
- Anyone who values level premiums and guaranteed cash value
- Owners of an existing universal life policy who want it reviewed
Life insurance and annuity products are issued by the insurance company, and guarantees are backed by the financial strength and claims-paying ability of the issuer. Kris Kryder is a licensed insurance agent, not a tax, legal or investment adviser.